The currency pair USD/JPY ( U.S Dollar vs Japanese Yen ) is a bellwether for “risk appetite” in markets. Simply put, when the currency pair rises…..risk is ON. When the currency pair falls – RISK OFF.
Risk ON meaning……the general investing community is in “buy mode”. Risk OFF meaning – “sell mode”.
USD/JPY – Weekly Chart.
I’ll let you be the judge….as “per always” – you can lead a horse to water – but you can’t make’em drink.
This chart looks terrible. After months of consolidation( June, July, August, September ) and now with the recent run up into “and after” the U.S election, USD/JPY finds itself at an interesting junction. You don’t see this in equity/stock markets as they only give you a tiny glint into the real world economy ( if any insight at all, considering the money printing and Wall St. corruption ) but…..currencies don’t lie.
USD/JPY will very soon turn. Global stock markets soon to follow so I challenge you to consider….
Are your assets currently protected? Stop losses? Mental stop losses? Greed got you by the balls? Any notion “what so ever” that…..tides may turn?
I’ve softened over these past years as….the Central Banks have made it impossible for the average “at home investor” to even consider things moving lower. I’ve “sung to the choir” at least a handful of times over the past years…encouraging my followers to exercise caution. I’ve been right at times….and horribly wrong at times.
This is another one of those times.
Caution warranted. Nothing more.
The U.S Dollar has now reached “another” serious area of resistance here around 100.00 / 99.85
Inversely gold and silver mining stocks ( and likely the entire metals complex ) look to be putting in a serious low here ( as suggested in my previous post ).
As I’ve suggested time and time again….the absolute best way to play these “potential turns” is to place your orders some 50 – 100 pips “below” current price action….or in the case of “getting long EUR/USD” some 50 – 100 pips “above”. This way…..you don’t get picked up if price moves against you ( nothing ventured nothing gained right? ) OR you do get picked up on momentum moving in your direction.
Another way to do this is to place your order “above or below” the previous days high/low ( as seen by the bottom or top of the candle of the previous day ) – keeping yourself out-of-the-way of intra day fluctuations, but still leaving you tonnes of room for profit – should price action move in your direction. The key is to get into the trade “on momentum” and not get caught in the daily volatility.
You can’t pick an exact price. You never can. No blog, no investment consultant, no snake oil salesman can call it that close – it’s impossible when you consider we are talking about moves in a currency as small as 1/100 of a cent!
As well…..if you are looking for further confirmation / theory that perhaps things are ready to turn lower….take a look at Apple ( AAPL )
If the entire planet is so “hell-bent on buying U.S Equities” – How come industry leaders like Apple look like shit?
In the wake of President Trump´s “trouncing”of Hilary Clinton, markets have been less than kind to our beloved gold and silver mining stocks. But wait…..
The Daily Chart of IMG
Stepping back and looking at the bigger picture, one can most certainly see that “all is not lost”. In fact….as I continue to build positions in one little gem in particular ( IMG ) we can look at recent days movement in the stock ( and in my view the entire metals complex ) as an excellent “opportunity” to take your shot, likely having missed out on my last buy some weeks ago.
Keep in mind the time frame here, ands “how long it has taken” for this stock to:
- Finish it’s downtrend: If you consider October 10th “the bottom” we can see price movement “gradually” heading in the upward direction, but it’s not until the green box that an experienced / seasoned trader / chart reader can honestly “confirm”….
- Uptrend has been established: Why you ask?? Because the series of “lower lows and lower highs” ( the zig motion of assets in a downtrend ) is now broken with the establishment of a “higher high”. It’s this signal that essentially “confirms that the downtrend has ended” but then of course you get this….
- The first major pullback in a newly established uptrend: It’s the stock market right? Everything generally moves opposite to what the majority of traders are thinking / doing so it only makes sense to see a major “dump” directly following confirmation of a new trend right?? This is so basic, so common and such a standard that many an experienced trader develops plans to “always look to buy on the first major pullback in a newly established uptrend”.
You can see how the levels so closely match those of the previous downtrend ( the orange line across the chart ) as the same levels that once offered resistance, now offer support ( see what happens when you start marking your price levels! ) with this major reversal looking something like a big huge “W”.
Price could just as easily stick around these levels for some days, but if traditional technical charting is worth a damn….this would be an absolutely fantastic place to take a shot at entry, as I am adding to my current position here at 4.98.
The expected “pop n drop” post-election looks to have run it’s course, and I would expect that both gold and Euro will continue to move higher, with stocks and $USD finally topping out. Opportunity abound my people….all you need to do is pull the trigger and keep yourselves protected.
Hope it helps. Have a great weekend everyone.
In a general sense……you can’t do shit when markets continue to trade sideways.
It’s very difficult for new traders as……you still feel that you “must keep trading” in order to keep money coming in. Trades go nowhere, you get frustrated…..then you make mistakes. Costly mistakes.
Taking a quick look at the Dow ( going back a few months ) we can see at least the past 8 weeks as virtually “unchanged”. Marketing stuck in the mud a full 8 weeks now.
You can’t “really” trade this, as this small amount of movement leaves little room for profit – and timing entries becomes paramount. You need to recognize it for what it is….and accept it. Then your trades / trading will improve.
I don’t really expect this to change until AFTER the U.S Election / Gong Show finally winds up in November, and will be planning trades accordingly. Smaller orders…lower expectation. More planning for the larger moves expected post elections.
It is what it is…..you’ve just got to learn to recognize it sooner.
With Japan now out of the way….we can clearly see that markets don’t dig it. The Yen is powering higher which is the absolute last thing Japan would like to see.
A strong Yen is terrible for Japan ( as a strong currency is for any nation these days ) and suggests that money is actually flowing “out” of markets – back to the place where it was originally borrowed at 0%.
Think about it.
Let’s say you went nuts and borrowed thousands of dollars when the interest rate was 0%, then invested it in U.S Equities hoping you could make a buck. Months later your U.S Equities trades are flat at best, but even more likely sitting at a loss. Then you figure out……hey wait a minute – if we get an interest rate hike here in The States…this market is gonna tank! You sit there thinking…..man I better get the hell out of here, or I am gonna get killed.
Imagine if they actually DO raise rates in the U.S today? You are hooooooped!
How will I pay back all that Yen I borrowed??
So you unwind your trade. You sell your U.S Equities likely at a loss…..then you have to convert the U.S Dollars “back” to Yen ( at a new rate that also hurts ) and finally pay back your loan. This is the fundamental driver behind movement in the currency pair USD/JPY. This is why it’s been tanking since markets “actually topped” back in late 2015. Everything else has been pure distribution as the big boys and heavy hitters unwind their Yen Carry trade, and it’s taken more than a year to quietly do so.
You can see it on the charts so clearly, and now that USD/JPY is at parity……things could get pretty ugly.
Clear signs that markets have more or less topped out – and have been distributing to retail “hopefuls” for the past full year.
Little mining stocks on fire….just getting started in the larger macro trend people so……go grab a couple!
Blah, blah blah……as once again The U.S Fed and Bank Of Japan keep markets on their toes.
Tomorrow we “should” hear from both, which sets up a pretty tricky scenario if you are thinking about placing any trades prior to the announcements. That’s not how I roll, although…….I am still holding every single trade entered like – 10 days ago.
Conviction is great, as I am 100% certain that The U.S Fed will not be raising interest rates this close to the election but we can never EVER count on The Bank Of Japan to do what we expect. In fact…there have been several times in the past where The BOJ has surprised markets – big time.
You are aware that the BOJ and The U.S Fed have been working together on this “propped up market” for years now right? Taking turns cranking up the printing presses as to keep these fake dollars / yen rolling into markets?
BOJ takes the next kick at the can
This coordinated effort is widely known….yet poorly understood.
It would not shock me in the slightest to hear Japan “beefing up” its easing and money printing efforts in order to keep the balls in the air a while longer as…..Japan is deep DEEP in The Fed’s pocket.
If Japan pulls the trigger ( allowing The U.S off the hook ) expect markets to rally…..otherwise…we continue flat across the top. Flat across the top until the elections are out of the way…then down.
Further currency trading prior to tomorrow’s announcements is plain stupid.
Sit tight….wait and see what shakes out.
It´s simple. Very simple.
The EUR and The U.S Dollar are simply the two most widely held currencies on the planet. This being said….you can usually generalize that weakness in one suggests strength in the other ¨regardless¨ of the news. Seriously…….all news aside you can generally just look at EUR and USD as ïnterchangeable¨ – trading nearly 100% correlated. Tit for tat.
So……..with further consideration that USD has now reached a major inflection point ( and is headed decidedly lower ) we can also assume that EUR is set to bottom. Fair assumption?
Now you start looking at EUR pairs specifically and ask yourself……which currencies will I see the largest moves in against EUR?? Well…….we can also assume that commodity related currencies take a hit when risk appetite subsides right? Currencies like AUD and NZD ( Australian and New Zealand ) generally fall when risk appetite wains so……long EUR and short AUD?
I’m watching exotic pairs such as EUR/AUD ( which also falls into my ¨faceripper¨ category, being that this thing is extremely volatile, and ready to blow up in your face at any moment ). You can’t trade this thing…..but you can sit on the sidelines and observe.
I´m watching this pair as of today…..not trading it – YET!
Facerippers are nuts. These currency pairs will clean out your account without a moments notice so please – do not try this at home! Watch this pair……watch for the coorelation to ¨risk on vs risk off¨.
There’s little more to be said here this morning – as The U.S Dollar plummets nearly a full 1%, down a full 100 points from 96.00.
Absolute Dollar devastation as both GBP as well EUR make 100 point gains, USD/JPY hit’s resistance and dumps….and our little gaggle of gold and silver miners now up 7-9% since entry.
I’m obviously short as “sh&%t”…and very well positioned ahead of the move. So what could you have done better perhaps?
- You “could” have plotted areas of support and resistance on your charts “long before this move was made”, and have been fully prepared with your orders
- You “could” have created 3 small orders and “legged in” over the previous 3-5 days, ensuring and average price and not betting the farm on a single entry.
- You “could” have shut of your T.V, eliminated the noise, and gotten back to your charting…where you would have clearly seen the set up coming.
- You “could” have opened your mind to the “other side of the trade” ( vs the general main stream media ) and taken advantage of some pretty early indications ( here at the blog ) that things where about to turn.
There it is…..likely the best possible entry / trade tip / suggestion that you’ve seen laid out for you over the last several days…no stress….no pressure. No chasing markets in panic…no text marathon’s with your broker…just proper planning and execution. A very well placed trade, looking to become a very VERY profitable trade.
So what are you gonna do now? Seriously………..what are you gonna do now?
As I’m sure you’ve been following the “bold call” earlier this week..our dear friend U.S Dollar “has indeed reached the 96.00 level”, and as suggested – has clearly been rejected.
On has to appreciate not only the timing and levels, but the “patience required” in planning your trades, then executing properly.
This trade “short USD” was outlined back on Monday.
This is the key difference in “planning a trade” as opposed to waking up early one morning, and “impulsively taking a trade” cuz of something you’ve heard / seen on the T.V. This generally has you “chasing markets” and usually ends in a loss.
Broadstroke……this has USD headed lower as expected. and will also likely mark a “daily cycle low” for both Gold and Silver ( have you bought your few small mining companies yet? ) providing these with several days upside to follow.
Perhaps consider a shot at EXK and / or GPL for some silver plays ( fun ones…….very cheap ).
Have at it people. If this hasn’t put you in a decent spot to make a buck er two shit……..what else do you need?
You can play “short USD” in any number of ways….and when considering “diversification” ( as any knowledgeable trader / investor should! ) why not throw a couple of bux towards those good ol gold and silver mining stocks.
As a “token” of my current plans moving forward “as planned”….I am placing the first of many orders “long gold and silver” ( inverse to short U.S Dollar ) here today.
Long IMG at 5.00 Even.
The currency side of things plays out pretty simply.
USD goes down and the largest gains are seen in pairs such as short USD/JPY and long GBP/USD, EUR/USD.
When risk comes off “in general” ( which will also happen for a time here ) even bigger gains are found in getting long JPY against AUD, NZD and CAD.
I expect U.S Equity markets to fall “along side” USD as well so – there’s a head scratcher for ya! Kong ! I thought that if U.S Equities get “sold” then money should just pour back into the U.S Dollar no???
The big boys are already out of their “long dollar trades” and it will be JPY that rises as U.S Equity markets sell off.
JPY is the funding currency for this gong show, and you will see it hit the stratosphere when equities are sold.